NZ Emissions Trading Scheme
Government Introduces the Climate Change
(Emissions
Trading and Renewable Preference) Bill
 Introduction
On 20th September 2007, the New Zealand Government unveiled details
of an emissions trading scheme, along with related sustainability
initiatives.
On 4th December 2007, the Government
introduced the Climate Change (Emissions Trading and Renewable
Preference) Bill and passed its first reading on the 11th.
The Bill has been before the
Finance and Expenditure Select
Committee (FESC).
- Submissions on the Bill closed on 29th February 2008
- The select committee hearings commenced in the 1st week of
April 2008.
- The report back from the select committee was released 16 June
2008.
2nd Reading Passed
The Bill passed its 2nd reading on 28 August 2008 with the support of
Green and NZ First parties -
agreed changes
- The 3rd
reading is expected to be on 9 September 2008 i.e. before the next election (October/November 2008)
Bill Documents
The report back contains:
- Recommendation by majority that the Bill be passed with the
amendments shown
- Commentary on substantive issues/amendments (53 pages)
- Minority Reports opposing the Bill as amended from the National
Party (9 pages) and the Green Party (2 pages)
- Fully revised Bill with amendments identified (258 pages)
A brief summary of the key design parameters is set out below.
Key Design features
Below are listed just a few of the NZ ETS design parameters. Click
here for a comprehensive list of
parameters.
Which Sectors and When?
Sectors will be phased in over time:
- 2008 Forestry
- 2010 Stationary energy and Industrial processes
- 2011 Liquid fossil fuels and transport (originally 2009)
- 2013 Agriculture, waste and all remaining sectors
Which Gases?
- All six Kyoto Protocol Greenhouse gases
- CO2, CH4, N2O, PFCs, HFCs, SF6
(from 2013)
Where is the Point of Obligation?
The point of obligation determines who in each sector has unit
obligations and within brackets below are the anticipated number of participants with
trading obligations in each sector:
- Forestry - landowners (or forestry rights holders)
- pre-1990 forest if deforested [potentially > 1000]
- Post 1989 credits and obligations [2000-9000]
- Liquid fossil fuels and transport - fuel suppliers [5]
- domestic aviation may opt in and take on obligations
- Stationary energy - coal, gas, geothermal suppliers [45]
- large users may opt in and take on obligations
- Industrial processes - end emitter [35+]
- Agriculture
- nitrogen fertilisers - suppliers [10]
- meat/dairy - processors [25]
- Waste - landfill operators [60]
What will be the Unit of Trade?
The unit of trade will be an NZ Unit (NZU). Each NZU represents one tonne
of CO2 equivalent emissions.
International Linking
NZUs will be "backed up" by a Kyoto unit to enable linking with
international Kyoto Protocol flexibility mechanisms. These can be used to meet trading
obligations:
- Clean Development Mechanism (CERs)
- Joint
Implementation (ERUs)
- Emissions Trading (AAUs) but restricted to:
- Greened AAUs;
- Imported AAUs originating from a country with a domestic ETS
linked to the NZ ETS
- Imported AAUs from county where AAUs represent emission
reductions
- Forestry lCERs and tCERs are disallowed.
This means that the price of an NZU on the NZ ETS will reflect the
international price of carbon emissions.
learn more
Link with Au-NETS?
Talks between the New Zealand Government and the new Australian
administration assessing the potential for future linking of the NZ ETS
to the Au ETS trading schemes.
As the Au ETS / CPRS does not allow an
outward flow of units and is not Kyoto compliant linking is not foreseen
until post 2012.
How are Emission Units (NZUs) Allocated to
Firms?
The Government will not provide assistance to firms whose profits will
be significantly unaffected by the NZ ETS. For others assistance will
be provided through gifting of NZUs, however:
- No free allocation will be provided to the upstream points of
obligation in the liquid fossil fuel and stationary energy sectors
(including electricity generators) and landfill operators.
- The pool of units for eligible industrial producers will be based on
90 per cent of 2005 emissions from those eligible industrial producers.
- Indirect emissions associated with the consumption of
electricity, as well as direct emissions from stationary energy and
direct emissions from non-energy industrial processes will be
included in the concept of emissions from industrial producers.
- Starting from 2013, when agriculture is brought into the ETS, the
free allocation pools for industrial producers and agriculture will
decrease on a linear basis so as to phase out assistance completely in
2030.
- The agricultural sector will be provided with a free allocation pool
equal to 90 per cent of 2005 emissions when it is brought into the ETS.
- In the forestry sector, free allocation will be provided such that
the Crown assumes a total liability (taking the cost of the provision of
the de minimus thresholds into account) for deforestation emissions as
follows:
- from 2008 to 2012, 21 Mt CO2-e for plantation forest, plus a
relatively small allocation set aside for forest weed control (eg,
wilding pine)
- from 2013, an additional 34 Mt CO2-e for plantation forest.
- Firms that cease trading will not retain any free allocation.
What is the Trading Period?
- The trading period is a calendar year.
- At the end of the trading period the emitter must relinquish
enough allowances to cover that year's emissions.
NZ Government Materials
Policy Advice
NZCX's role is as a broker and so we do not provide policy advice.
For help in this areas, please contact our affiliates:
Forward Trades
If you want to purchase international CERs to meet an expected
obligation or if you want to forward sell NZ AAUs or NZUs then contact
us now.
|
